October 31, 2012

One has to wonder whether any smart person really wants to be president during 2013-2016.

I think that both men have had second thoughts, and at times shown real ambivalence about winning, which comes out as surprising political mistakes that could throw the election.

We shouldn't be surprised.

After all, when overall global savings looks set to exceed demand and investment -- global private savings remaining high while global governmental spending decreases -- we can expect tough times and then recriminations in 2016.

Regardless of current rhetoric and mythological language.

One might say something like "Government doesn't create jobs," but one actually knows, down inside, that what creates jobs is for money that is earned to be spent or invested in investments that result in increased spending. Investments not in assets bubbles like stockpiling gold or London houses, but more traditional, normal investment -- money for new roads, buildings, science, machines, education, home renovation, capital investment in technology, all the productive things the word "investment" has meant in healthy economies for centuries.

If so much money continues to be saved (think China, Germany consuming a fraction of what they produce) so that savings considerably exceed spending and productive investment, then you have a problem.

Unless the abundant savings is all borrowed and used to build roads, educate students, improve technology, etc., then the economic circular flow of money that supports all of our jobs and income gets attenuated, constantly, until something radically increases spending (as did World War II and it's preliminary buildup)....

Regardless of rhetoric, both of these men are smart enough on some level, even intuitively, to know this, and be aware of the real situation, the real way the economy works.

So why would anyone really want to be President in 2013, when China and Germany will continue to fail to use as much as they produce, exporting unemployment around the world, while the US looks likely to reduce it's deficit spending, and thus use less of the excess global savings?

I think lately both men have come to terms with this situation, and set their own internal goals.

For Obama, I think his goal is to see through his initiatives -- green energy, education support, continued federal dollars for science, even health care reform -- things that provide a stronger future for the nation.

Even health care security helps the economy -- when workers feel more secure about their health care, they are more willing to buy a new car or tip the waiter more at a restaurant.

Essentially, when there is abundant unused savings, the strongest national economies can borrow at rates that hit record lows, because the markets are looking for any safe yield, even at 1.5% or less.

How fundamentally strong is the U.S. economy? Many billions of free floating dollars choose U.S. Treasuries as their home. Why? In part because economic strength depends on market demand -- consumer demand -- and the U.S. has the most of that in the world. Ergo, this is the most fundamentally strong and sound economy in the world.

But that doesn't mean a titanic mortgage credit bubble and collapse is easy to ride out. It's no ordinary storm. This ship could be steered sideways to the waves and find itself truly foundering, instead of only riding rough seas as now.

So why does Romney want to be President?

For Romney, we are forced to speculate.

Is it Power? A vision of personal greatness and prestige?

Does he have actual beliefs, in spite of changing positions? Actual beliefs that are passionate, in spite of the smoothness and clear acting?

He's a tremendous Story Teller, one of the best around.

While the U.S. has done far better than any other nation that suffered a major housing bubble and collapse in the last few years -- better in employment, better in the general economy, and best in the world in reducing total debt of the combined public and private debt load (private debt in the U.S. has declined far more than public debt has increased)....

Romney has made it seem, through masterful story telling, that this very good result is a real failure.

Imagine a student who does the best in a class of 20 on an extremely difficult test, scoring only 70%, and then a bystander labels that result not as a success, but as a failure, and works to convince many other people that the success is a failure.

But what is Romney really after? What does he really want, himself, personally?

Perhaps he wants to be the Boss. It's a theory. To project power around the world.

Instead of walk softly and carry a big stick, it appears from his own words at times that Romney would like to walk aggressively and be quick to whack some heads when an opportunity shows up.

Is that just bluster meant to nab a few votes, or is it a real attitude?

From his description of Obama projecting weakness -- as if all the fighting and resolve we have shown becomes weakness if we are diplomatic in language abroad -- it seems Romney imagines that acting hard nosed and seeming uncompromising to some other peoples is good for security.

It is good for losing some friends and alienating some good will and losing some soft power influence, the kind that actually matters over time.

The wise know that it is better, safer even, to be loved than to be feared.

But, unlike Obama, Romney can imagine that the ease with which he exercised power at Bain Capital is a way to lead a nation and an economy. He can imagine this because he hasn't faced the detailed information and reality that Obama has. He hasn't been disillusioned of his delusions, yet.